How Current Finance Trends are Shaping the AP Function

March 4th 2024 | Posted by Dave Cross

The accounts payable (AP) function is critical to the financial efficiency of a business, especially during the current period of economic uncertainty. In this environment, automation and real-time data are more important than ever and are at the centre of current trends shaping the AP function.

A closer look at these finance trends shows more details. It also provides insights into other factors involved with AP function trends.

Economic uncertainty is likely to remain in 2024

The economic situation in the UK remains uncertain in 2024. This creates problems for many businesses. According to Office for National Statistics (ONS) data, more than 29% of businesses reported turnover had decreased from November 2023 to December 2023. On a positive note, 18% of businesses reported that they expected turnover to increase from January 2024 to February 2024.

However, 14% of businesses expected turnover to decrease over the same period. This indicates the uncertainty that remains, making effective collection of AP essential.

Monitoring of cash flow as part of a cautious approach

The lack of financial certainty is also leading to a more cautious approach from many businesses. Finance professionals are concentrating on cost reduction and efficiency rather than taking risks. This approach involves closely monitoring cash flow, which often involves the automation of AP to gain improved control over payment flows and timings.

Growing focus on data

AP data is now seen as essential as a source of strategic value, especially in the current financial climate, making timely and accurate AP data vital. Lack of visibility in this area can damage businesses, as it can directly impact relationships with customers and suppliers.

The continuation of a flexible working approach

The trend for flexible working that took a firm hold during the COVID-19 pandemic is going nowhere. Remote and hybrid working patterns are still very much a part of life. These working patterns can be problematic for businesses with manual AP processes that require in-person approvals. So, there is a move to embrace the automation necessary to ensure that hybrid or remote AP work environments work efficiently.

Embracing automation

We have already touched on the trend of automation in AP, as part of the overall automation of the finance function. AP has often been associated with manual systems that lack efficiency. This is changing as automation brings improvements that give businesses a competitive edge.  As technology, and AI in particular, advance, the trend of automation will continue.

Supporting a customer-focused approach

Customers expect a business to be efficient and provide good service. Inefficiency in the AP process can adversely affect these aspects of customer service. In this environment, there is a trend to optimise AP performance to improve customer relationships.

Security and fraud prevention

Increased digital transactions and remote working have necessitated an enhanced focus on robust cybersecurity and fraud prevention in the AP process. This AP trend involves the adoption of advanced encryption, AI-powered anomaly detection, and multi-factor authentication to mitigate risk and improve stakeholder trust while maintaining regulatory compliance.

These finance trends will continue to shape the AP function as we progress through 2024.